Banks successfully back women through agri-finance: success stories and the challenge ahead

I wake up this morning tired and a little sluggish, more so than the previous days but I have work to do… So I must bounce. It’s the second day of the Fin4Ag Conference and I am attending the session on “Women in agri-value chain Finance: Tips for Success!” Chaired by Dr Joyce Cacho, Consultant and Advisor for Agribusiness and Gender at the Department of Rural Economy and Agriculture for the African Commission, Ethiopia.

Although women smallholder farmers are responsible for over 60% of food nutrition and security, very often, little attention is given to them. However, this is gradually changing as most private and public entities are recognising the role of women in the agri-value chain.

In Ethiopia, the Enat Bank, a commercial bank with a focus on women, designs most of its products targeting and promoting women smallholder farmers. For example, women earn higher interest on savings (5.5%) than men (5%). Also, they have an Enat Collateral Saving program in which volunteer shareholders or customers save money in a block account to support women with great business ideas who do not have collateral to secure financing for their idea. With 50% of women being shareholders and all branches named after prominent women in the society, you can comfortably call it a women’s bank.

Not all governments and countries are lagging in supporting their women farmers. In a presentation by H.E Dr Joseph Sesay, Serra Leone’s Minister of Agriculture, he showcased how the government is breaking the norms of collateral being a limiting factor in securing loans by 2 simple means. To secure a loan;

you must be a shareholder of that bank;

and be recommended by a community group.

Under the community group structure and bank membership model, borrowers’ have two compelling reasons to repay. Also, through small schemes set up around the country, women are taking the lead in some households. For example, in the Karbala area, through their vegetable business, women are employing men and assisting with household responsibilities such as paying fees for their children’s education and catering for their basic health needs. While this is a great idea, we only hope we do not create a bee society, which is where the men completely depend on the women.

Although much is said about the importance of agriculture as a means of fighting poverty, given its function as an economic driver on the continent, there is an inverse relationship with respect to what is said and what is done.

You still hear of 3% budget allocation to agricultural projects and some banks still make loans at 16- 22% interest rates. If we truly believe agriculture is can become a key economic driver, stakeholders need to come up with policies that catalyses the sector and drives sustainable agriculture.

Although smallholder farmers, mostly women, cultivate small pieces of land, they feed the bulk of the population. These women are investing in agriculture to make profit, too. We must see them as a source of tax revenues and employment, not just a source of cash transfer!

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.